Audit services for import and export businesses
International trade creates accounting complexity that domestic businesses don’t face. Multi-currency transactions, customs duty treatment, transfer pricing between group entities, and foreign exchange risk management all need careful handling in the financial statements. Your auditor needs to understand how HMRC approaches customs compliance and how trade flows affect the numbers.
We audit businesses that trade internationally across a range of sectors, from wholesale distributors sourcing from the Far East to UK manufacturers selling globally.
What makes an import/export audit different?
Several areas distinguish the audit of a trading business from a purely domestic company:
- Foreign currency transactions – Sales and purchases in foreign currencies must be translated at the transaction date rate, with monetary balances retranslated at the year-end rate. We test whether exchange gains and losses are correctly calculated and disclosed.
- Customs duty and tariff classification – Duties form part of the cost of goods. The auditor checks that duty rates match the commodity codes used on each customs declaration and that duty is correctly capitalised into inventory cost.
- Transfer pricing – Companies trading with related parties overseas must price those transactions at arm’s length. HMRC scrutinises transfer pricing arrangements, and we check whether the company’s intercompany pricing policy is defensible and properly documented.
- VAT on trade – Post-Brexit VAT rules for goods crossing borders are complex. Postponed VAT accounting, zero-rating conditions, and the rules around goods in transit all create risks that need consideration.
- Letters of credit and trade finance – Many trading businesses use documentary credits, trade finance facilities, or invoice discounting. These arrangements need careful assessment for correct accounting treatment and disclosure.
HMRC customs audit and compliance
HMRC conducts customs compliance audits on businesses that bring goods into the UK. These focus on the accuracy of customs declarations, correct duty treatment, and compliance with trade facilitation schemes like simplified customs procedures and duty deferment.
A customs audit by HMRC is different from a financial audit. The customs audit examines whether your declarations are accurate and whether you comply with import regulations. Our financial audit looks at the accounts as a whole. But there is overlap: if we identify non-compliance with customs procedures during our work, we consider whether it creates a material financial exposure – underpaid duty, potential penalties, or provisions that need recording.
Being compliant from an HMRC perspective means having proper documentation for every transaction. We help businesses that have been selected for an HMRC customs audit to prepare their records.
Compliance audit considerations
Beyond customs, trading businesses face a range of compliance obligations that affect the financial statements. Sanctions screening, export controls, anti-money laundering checks on overseas counterparties, and compliance with trade agreements all create risks. The compliance work we do as part of the statutory engagement covers whether the company has adequate systems to manage these obligations and whether any known breaches create contingent liabilities.
For businesses using duty relief schemes, inward processing, or customs warehousing, we check whether the accounting treatment correctly reflects the commercial substance and whether HMRC’s conditions for the relief are being met.
Inventory and supply chain risks
Trading businesses typically carry significant inventory, often with goods in transit at the year end. We address:
- Cut-off testing to ensure goods in transit are recorded in the correct period
- Inventory valuation including landed cost (purchase price plus duty, freight, and insurance)
- Provisions for slow-moving or obsolete stock, particularly where product lines change seasonally
- Adequacy of insurance on goods in transit and in overseas warehouses
Our approach
We’re ICAEW-regulated and on the Register of Statutory Auditors. We understand international trade and the specific risks that cross-border operations create.
Fees are fixed and agreed before we start. If your business trades internationally and needs an auditor who understands the complexities, call us on 0161 832 4451 or request a callback.
